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Karst chat with Paul Lightfoot: taking local to the roof

I had the chance to chat on March 30 with Paul Lightfoot, chief executive officer of BrightFarms, a hydroponic greenhouse rooftop farm in Brooklyn, N.Y.

2:30 p.m. Tom Karst: I was interested to hear about the April 5 event to announce of the opening of BrightFarms in Brooklyn, which your company has said will be the nation’s first and largest greenhouse rooftop facility. Is there a lot of resonance and support for this concept?

2:31 p.m. Paul Lightfoot: Very much so. People are really clamoring for more food that is local, so they know where it comes from. Me being in this business is not a coincidence; I’m responding to the market demand. And in this case, the city of New York has not produced a whole lot of produce historically, and it’s a big city. So people are really interested and places I don’t always think about, like the people who run New York City, the elected officials, are really excited to see jobs created in New York City that are about creating food, which forever has been brought in from the West Coast or other countries.

2:34 p.m. Karst: Tell me about the actual rooftop facility. What it is like and who is the party that will carry on its operation after it is built?

2:34 p.m. Lightfoot: The building itself is a very very substantial structure, built for the military and originally owned by the Navy. I think the Navy story munitions in it and at some point they realized that Brooklyn wasn’t where they wanted to store tanks and bombs. They gave it to the federal government, who used it in different forms for a long time. The FDA stored stuff there in the warehouse. That also wasn’t the greatest use, and it was given to the city, and the city in turn handed it to a private developer in exchange for a promise to develop it with light industrial and retail use and not residential. So that’s the partnership we stepped into; the borough of Brooklyn and the developer brought us in to develop the roof, essentially. The roof itself has about 100,000 square feet of open space we can use, which is about two and a half acres. (The roof) is very, very strong and thick because it was built for military purposes, and it didn’t require any structural work, which was important for us. And it is in a beautiful place, on the Brooklyn waterfront overlooking the skyline of Manhattan. It is in a part of Brooklyn that is really coming into life again. It had once been sort of a post-industrial area and Brooklyn itself is on fire right now. People are moving to Brooklyn from everywhere in the world right now. Brooklyn’s hot, and this is part of that.

2:36 p.m. Karst: So you are obviously developing the property for use as a hydroponic greenhouse.Is it your ambition to have several of these greenhouses and operate them yourselves, or to market the concept and have other people take ownership?

2:37 p.m. Lightfoot: We will own the facility and operate it on behalf of our supermarket clients. In every instance we will hold on to the facility and will operate it and deliver the output to supermarkets. That’s the model we are rolling out everywhere.

2:38 p.m. Karst: What the crops you are looking to grow in the Brooklyn greenhouse?

2:39 p.m. Lightfoot: In this case, it will be lettuce and tomatoes and a small amount of a small amount of herbs like basil. That may not always be the case, but what will always be the case is that we are looking for the intersection between high demand, our ability to grow that product in a controlled hydroponic environment, and the arbitrage opportunity. For example, we’re not trying to grow kale here, because kale doesn’t present a great arbitrage opportunity; you can grow kale pretty easily in a lot of places and pretty cheaply, but lettuce and tomatoes, we feel they are produced relatively inefficiently in North America. Lettuce in particularly is almost entirely coming from the West Coast and is produced in a way that the producer of the food getting less than half of the wholesale cost. We see that as an arbitrage opportunity, for us to come in with competitive pricing and still make money by cutting costs out of the supply chain.

2:40 p.m. Karst: When will the facility have produce coming off the roof?

2:41 p.m. Lightfoot: We are planning to be live in the first quarter of 2013.

2:41 p.m. Karst: Do you think this concept is transferable to other cities as well?

2:42 p.m. Lightfoot: Absolutely.

2:42 p.m. Karst: What is the reaction from the supermarkets in the city and are you getting positive energy out of that?

2:42 p.m. Lightfoot: The reaction of the supermarkets has been unbelievable. The supermarket industry recognized that they are paying more for transportation and distribution than they are for some products. That doesn’t make them feel great. They want to sell good food at good prices to their customers, and they realize that the length and complexity of some of the supply chains are making it so they are not selling good food at prices. They are selling (products) don’t last very long, that aren’t safe in some cases, that lack the taste and nutrition they would have if they were fresher and more local. And that is the reason they are reacting very warmly to it and why a lot of big supermarket chains in the country are working on projects with us. We’re simply coming to them and saying, we are going to give you a better product at the same or lower prices in a way that is better for the environment.

2:44 p.m. Karst: The local food movement is a big part of this and cutting out transportation costs...

2:45 p.m. Lightfoot: Not just transportation, but distribution as well. By distribution I mean the marketing companies in the middle that manage the grower and manage the transportation. It’s a combination of transportation and distribution.

2:46 p.m. Karst: What about the community? How many folks do you think will work at the facility?

2:47 p.m. Lightfoot: The Brooklyn facility - it may be too early to say - I think it will probably be up to 25 full time sustainable jobs, and the community loves that. These are jobs that historically have never been in New York City. And the same thing happens when we talk about a project in St. Paul, Minn. or Bucks County, Pa. These are just jobs that have been in Mexico, California or Arizona for decades. So they are thrilled to have economic activity of their purchases power being directed to their communities. We really focus on the idea that we are going back to the agricultural heritage of this country where food is grown and sold in one community, where the farmer sends his kid to school with the kids of his customers.

2:48 p.m. Karst: So you many facilities like the Brooklyn facility are you planning?

2:49 p.m. Lightfoot: We are building three right now with the new business model for us. We have been part of seven greenhouses so far, and none of them were these commercial turnkey projects that I am talking about in Bucks County, Pa. and Brooklyn. They were projects we did on a consulting and engineering basis in our former business model, which was essentially hiring out our expertise to build integrated agricultural projects. This is a concept we have only been talking with the supermarket industry about for 13 or 14 months.

2:50 p.m. Karst: What do you think will be you biggest challenge before you starting putting tomatoes and lettuce in cases for delivery in New York?

2:50 p.m. Lightfoot: We’ve got a supermarket selling our product right now from a Long Island greenhouse so it is already going. For the project in Bucks County, the contract has already been signed with the supermarket and it is just a matter of construction. There are not a whole lot of hurdles there. In terms of scaling out, though, across the country - our goal is local produce nationwide - one of our greatest hurdles is that the supermarket industry is inherently conservative. Typically, they will adapt innovations when they are forced to competitively but not that many supermarkets are pushing boundaries on their own. In this case, getting them to agree to long term fixed price contracts for produce is not how they have done it historically. That’s one of our biggest challenges is getting many of them to agree to something different than the way they have always done it. But it’s working. We’ve got a couple out there and we’re working on more and it is the snowball effect. As they see others doing it, they react.

2:51 p.m. Karst: Do you see a facility’s output going to one chain, or is it an arrangement where the product would be available to all chains that might be interested.

2:52 p.m. Lightfoot: No, no. Very clearly it will be one supermarket. We are in discussions with several metro area supermarket chains. We will ultimately choose to do business with one of them. When they think about it, they view this as being a national model for urban agriculture and this is the most productive truly urban farm I think that the country is going to have and it ot focused on restaurants or schools. It is focused on supermarkets. So whoever becomes our partner in this project will really be the most innovative local food supermarket on wide scale in the country. It is a chance for them to establish themselves in the biggest city in the country as a model for the rest of the country.